Steve Reed Tourism Limited is a family-run tourism marketing company with offices in Hampshire in the United Kingdom. The company is currently under the management of Steve Reed and it started its operations in 1999. According to Steve Reed Tourism (2014, par. 8), this company strives to promote different organisations in the public and private sectors including ‘hotels, visitor attractions, shopping centres, transport providers, tourist boards and local authorities’. The company specialises in group travels and it provides services such as group-sales’ training, product development, sales mentorship, group buyer showcases, public relations training, email broadcasting of businesses, group travel site inspections, and representations. The company’s management has adopted a centralised leadership style under which the overall manager makes most of the crucial decisions.
Adair (2010) describes this type of leadership as one in which power in terms of decision-making emanates from a central point and spreads to the rest of the players in the organisation through delegations and subordination. Northouse (2012) explains that such a hierarchy of power has its advantages and disadvantages and its success depends mainly on the way the leaders apply their authority within an organisation. Some leaders choose to delegate duties using specialisation as the core determinant of the responsibilities that people get, while others prefer a collaborative format in which employees and managers work together as a team and involve entities outside the organisation in their operations. The leadership style at Steve Reed Tourism is centralised and there is a strong link between leadership style and organisational performance as highlighted in this paper
Advantages of centralised leadership
One of the advantages of centralised leadership is that it creates a concise chain of command through which delegation of power is possible. The importance of such delegation of power lies mainly in the fact that employees and clients need to understand the roles that people in the organisation play for purposes of identification of the right people to address their concerns. This aspect is especially important in the tourism industry for companies such as Reeds as most companies with similar set-ups depend largely on scheduling clients and ensuring that they receive services at the right time (Cutler 2011).
For Steve Reed Tourism Limited, clients know that they can get in touch with the management, which in this case is Steve Reed, but they need to go through the proper channels in order to ensure that they do not overwhelm the management with too many concerns to handle at once. The chain of command and subsequent delegation of powers filters out issues of concern from clients and employees, thus ensuring that they get assistance on trivial matters so that the management pays proper attention to serious issues concerning the company (Grout & Fisher 2007). For instance, issues such as consultation on pricing are trivial in comparison to strategy development for training programs for an entire year, thus requiring delegation of power to individuals such as secretary or the manager’s assistant.
The second advantage of centralised leadership is that it creates accountability for individuals working within an organisation. Every individual within an organisation operating under centralised leadership has specific roles to play according to the amount of power that the management delegates to him or her. In turn, the individuals are answerable to the person delegating such power in cases where there is improper or inadequate execution of specific tasks. According to Smith and Sigauw (2010), the ability to identify a specific individual responsible for given errors inspires commitment to tasks and allows the organisation to identify employees experiencing trouble in certain areas of their work.
In such cases, the management is in a position to address the inadequacies and correct the situation before it reaches a crisis level thus resulting in loss of profits due to the development of a bad reputation. In the tourism and hospitality industry, reputation is crucial in the development of the company and its success in terms of obtaining clients and sale of services, especially to a fixed clientele. Customers rely mainly on the reputation of an organisation to accomplish its tasks when making decisions on whether to hire a company or seek alternative solutions.
In the case of Steve Reeds Tourism Limited, the ability for employees to perform their tasks adequately is crucial as it affects the success of the company as well as that of companies that rely on its services to build on their own profitability. Therefore, failure on the part of employees in Reed’s company to execute their duties sufficiently would result in failure for organisations that rely on this company for their own success. In extreme cases where it is impossible to train an employee to execute certain tasks that fall under his or her responsibility, a company may have to replace such employee for the ultimate success of the company’s business.
The third advantage is that the centralisation of management and leadership eases the decision-making process for the management as well as employees thus improving service provision for clients (Sheppardson & Gibson 2011). According to Covey (2012), an effective leader is one who can make proper strategic decisions in time to resolve issues in the organisation requiring such strategic planning and execute the plans appropriately in compliance to organisational goals and objectives.
Such resolutions require flexibility and the ability to make decisions that allow an organisation to adapt to changes. Unlike most other industries, the tourism and hospitality industry is volatile, as clients demand more of one service at one time and another as time passes. These conditions sometimes require leaders in various organisations within the industry to make decisions that alter mechanisms currently in place in order to reap from rising demand on certain products. Effective leaders in this industry need to be ready to make such decisions and having the power to do so through centralised leadership certainly helps. In the case of Steve Reed Tourism Limited, the centralisation of management roles allows the company to cater for different clienteles and develop training programs that cater to their various needs in addition to providing the organisations with access to potential clients depending on their areas of operation within the tourism and hospitality industry.
Another advantage common to centralised leadership is the ability of an organisation to maintain consistency in operations and consumer satisfaction. According to Chesser and Cullen (2012), most clients in the tourism and hospitality industry prefer different goods and service providers for various reasons. For instance, a client might prefer one establishment for his or her dietary needs and another with regard to accommodation, although in most cases, one would go for one with both. To most first-time clienteles, the main attraction to any institution is the quality of goods or services that various institutions offer.
However, in order to maintain the client base, such institutions need to develop consistency and ensure that clients get the same services or goods that attracted them to the institution. In their book, Leadership and Management in the Hospitality Industry, Woods and King (2012) explain that leaders in centralised organisations have the upper hand in ensuring that the quality of their companies’ services is consistent. This goal is achievable via policy development and the existence of elements such as accountability, which ensure that every employee in the organisation performs his or her duties as required.
Lastly, centralisation of leadership fosters the development and maintenance of organisational cultures that make organisations unique. Different organisations have different preferences in terms of modes of operation owing to the varying goals and objectives. For this reason, effective managers develop policies that cater for the unique requirements of their companies, often resulting in the creation of organisational cultures. For companies where decision-making responsibilities spread among groups of individuals, it is often difficult to establish policies that generate consistent organisational cultures due to varying opinions. For instance, some individuals consider provision for recreational activities in the company as a waste of company’s resources while others understand the same as being essential for employee motivation.
In a scenario where most decision-making duties rest upon the two individuals, it is highly likely that policies resultant of such decisions would generate inconsistency, thus making the development of organisational culture barely possible. The importance of organisational culture is that apart from consistency in resultant goods and services, it makes the work environment friendlier for employees. Friendly working environments for employees in turn result in better performance, more revenue, and better relations between employees and customers. Ultimately, the company’s reputation grows, thus attracting more clienteles to the company hence leading to success.
For Steve Reed Tourism Limited, the consistency in organisational culture has fostered friendly relationships between employees and clients, which has resulted in the creation of a steady client base for more than ten years and it continues to foster the company’s growth through referrals from existing clients. The company’s clients are based all over the United Kingdom despite the fact that the company has offices mainly in Hampshire.
Disadvantages
The main disadvantage that centralised leadership presents for companies in the hospitality industry is that it limits the level of innovation that the company develops, thus creating a possible risk of stagnation in growth. According to Fullan (2011), companies that strive for growth need to incorporate innovation in strategy development and implementation in order to ensure that they stay ahead of the competition and grow their client base.
Fullan (2011) explains that although certain methods work well for some time, market demands often alter the business dynamics, thus requiring business leaders to keep up in order to reap optimal profits (Fullan 2011). Businesses that lack innovation risk stagnation in revenue and eventual deterioration, often resulting in liquidation. This aspect usually occurs because the company’s goods or services become redundant and irrelevant to the existing clients. An efficient leader recognises the need to invent new ways of packaging goods or services that the company offers to ensure that they remain attractive as competition rises with time.
Fullan (2011) adds that innovation requires a proper understanding of current company policies and operations, identification of potential problems in operational development, strategic development of solutions unique to the organisation, and systematic implementations of such solutions. In some cases, companies need to initiate changes in a gradual manner while other cases require a complete overhaul of systems.
Either way, managers need to be ready for change and prepare their organisations appropriately in order to ensure compliance from employees as well as clients. Reed’s company has so far applied a few innovative methods of marketing its services in addition to those of its clients in the tourism and hospitality industry. The company began its operations at a time when technological advancements, such as the Internet were non-existent. However, the management has ensured that the company embraced new technologies, which it uses to broadcast its services. However, in order to ensure that the company’s products remain relevant, the management needs to research and incorporate any new methods that might help the business in marketing and accessibility of services.
Secondly, centralisation of leadership limits the potential of other individuals in the company to share their input regarding the development of new ways of handling problems and providing innovative solutions for the benefit of clients. For this reason, it might take longer for the company’s leadership to develop new products and solutions, thus limiting the company’s potential for progress. Morgan (2012) mentions that allowing employees to take leadership roles with reasonable limits to the amount of power they possess over tasks allows employees to own their projects and execute tasks with zeal.
Granting employees some power regarding decisions that they make while performing their duties is one of the many ways management can motivate employees (Morgan 2012). Such delegation of power also reduces the number of decisions that managers have to make with regard to clientele and it allows managers to focus to pertinent issues in relation to policy formulations and implementations (Yukl 2012).
In Reed’s case, the CEO makes most of the solutions and works directly with clients, thus limiting the amount of power and leadership opportunities for employees. Although the move instils confidence in customers concerning solutions for their problems, it creates the perception that the management has little trust and faith in employees, thus generating possible feelings of lack of value in the employees (Podmoroff 2005).
The downside for such a scenario is that in cases where the manager is absent, employees are likely to handle clients differently than s/he handles them, thus damaging consistency in service provision. For instance, a tour guide inspecting a group-touring site is unlikely to interact with clients and provide the same feedback that the CEO does when handling the same clients. Although sometimes the outcome is positive, the inconsistency in services creates uncertainty on the ability of the company to deliver quality services at all times (Tromp & Blomme 2014).
Lastly, centralisation of leadership creates a loophole with regard to oversight on the use of managerial powers thus leading to a high likelihood of the occurrence of fraud. Testa (2007) posits that even though benefits of centralised leadership such as quick decision-making make the running of an organisation smoother, people should not overlook the possibility of fraud, which is resultant from lack of proper financial oversight. In cases where the manager is the overall authority, the company should employ the services of an independent audit firm to conduct random periodic checks and ensure that the financial health of a company is at par with its operations.
Conclusion (Link between leadership style and organisational performance)
In the business world, there is usually a link between an organisation’s style of leadership and its performance. Various leadership styles affect an organisation’s performance differently, depending on the elements of the organisation that they affect. Collaborative leadership mostly affects relationships among people within an organisation and their clienteles, suppliers, and advisors outside the organisation. Similarly, centralised leadership affects relationships within an organisation, especially with regard to power to make decisions, albeit within the confines of the organisation’s structural make up. Apart from relationships, other elements that types of leadership affect include performance, policies, and the reputation of an organisation within its market population (Anderson 2013).
A collaborative style of leadership usually has more positive effects on an organisation’s performance than the centralised style does due to the dynamic nature of interactions, which provide extensive access to information that is valuable to the organisation.
Examples of such information include feedback from clients on the current products and services, possible methods of improvements, and new goods or services that they would like to access through the company. Suppliers provide information on new developments in technology, products, and service delivery avenues that a company might want to exploit. This aspect in turn improves policies, employee performance, and overall organisational performance. Centralised leaderships restrict the power of employees to make decisions that have the ability to improve organisational performance coming from information that they acquire from clients during business dealings. The result is low poor employee performance and an overall drop in the company’s performance.
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